Trailing drawdown
A maximum drawdown whose floor follows your highest balance or equity upward, a fixed distance below it.
With a $5,000 trailing drawdown, reaching a high of $103,000 moves the floor to $98,000. Losses never move it back down. Your room is always measured from your best point, so giving back profits uses up room even if you are still above your starting balance.
Firms differ on what they trail: the end-of-day balance, the balance after each closed trade, or live equity including open profit. Many stop trailing once the floor reaches the starting balance, after which it behaves like a static floor.
Related
General definition. Rules differ between firms and change over time; your firm’s current terms always take precedence.